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What came first, the chicken or the egg?
Or in this case Inflation or a rising Money supply?
I took the following data sets:
Consumer Price Index for All Urban Consumers:
All Items
1982-84=100, Not Seasonally Adjusted
Source: U.S. Department of Labor, Bureau of Labor Statistics
M3 Money Stock
Not Seasonally Adjusted
Billions of Dollars
Source: H.6 Release -- Federal Reserve Board of Governors
I standardized the two series (subtracted the mean and divided by the
standard deviation) to scale the two data sets to each other.
So does the CPI rise coincidentally with the Money Supply or vice a
versa? Or is the inflation that AG is so concerned about due to his own
action of over increasing the Money Supply?
Ron McEwan
Attachment Converted: "f:\eudora\attach\m3_cpi.gif"
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